The dollar and the yen are the laggards as we get into European trading today. This comes as we see a more positive risk tilt, on the balance of things, as the market continues to sort out its feet.
Equities are pushing higher and that is helping with the mood as we also see some outflow away from bonds. It has been a case of develeraging in April but the last few sessions have featured more of a risk flow narrative instead. Today seems to be one of those days as well.
Amid the more positive tone, EUR/USD is now up 0.4% to 1.0474 as weekly support at around the 1.0400 level looks to hold:
The 200-hour moving average @ 1.0496 and the 1.0500 handle will be key resistance levels to watch next.
Meanwhile, GBP/USD has also moved up to 1.2400 – up 0.7% on the day currently. There is some minor resistance at the 1.2400 level so we’ll see if buyers can break through that to push for any further upside leg.
Elsewhere, AUD/USD is up 0.6% to just above 0.7000 as buyers try to wrestle back some control of the pair after the supposed break below the figure level:
That will be a key spot to watch in trading this week to see if the downside break can hold or if it turns out to be a bit of a false break.
In the grand scheme of things, I reckon this is perhaps a bit of an overdue pullback for the dollar but as long as the global economic backdrop continues to remain rather iffy and inflation continues to pose a major problem, it’s tough to find alternatives especially when the Fed remains the frontrunner in the central bank tightening game.